THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Sunday, August 21, 1994 TAG: 9408210075
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY KAREN WEINTRAUB, STAFF WRITER
DATELINE: VIRGINIA BEACH LENGTH: Long : 116 lines
For years, officials have warned that their city's vitality would be choked off if they didn't get more water soon.
While they were portending doom, the trouble actually hit.
Residential development for the first six months of 1994 is 18.6 percent lower than that for the same period in 1992. The assessed value of vacant land in northern Virginia Beach is being lowered by as much as 40 percent, and city water for new developments is expected to run out by this time next year.
``I don't think there's any question that (the water crisis) has already had an impact on the pace of development,'' said Tuck Bowie, president of the Tidewater Builders Association. ``Under the given scenario there are a lot of people who have stopped looking at Virginia Beach as a viable development option. . . . There are too many risks involved.''
The city's problems don't seem to have affected the rest of the region - at least not yet.
In the first six months of 1994, home building in the city was 18.6 percent lower than that in the same period of 1992, while it was increasing more than 10 percent in the region, said John Whaley, director of economic services for the Hampton Roads Planning District Commission.
``If we can't build homes in the city of Virginia Beach, we will more than likely build them in other locations, at least in the near term,'' Whaley said.
Because the rest of the region will still be growing, the slowdown in Virginia Beach won't have much impact on city residents, several economists said.
City leaders disagree.
``There are very few segments of our community that would not be affected,'' said Oral Lambert, Virginia Beach chief of staff. ``The rippling effect would be dramatic. People who are involved in the building industry would be out of work - suppliers, designers, engineers, attorneys . . . then their loss of spending power is going to be very quickly felt by merchants, restaurants, theaters . . .''
``This is not Virginia Beach's problem, this is a regional problem,'' Bowie said.
Clearly though, the problem is striking the Beach first and hardest.
Two years ago, one-third of all houses built in Hampton Roads were built in Virginia Beach. Today, a quarter of the houses built in this region are located there. In the first half of this year, 948 houses went up in Virginia Beach, compared to 1,165 houses in the first half of 1992.
Whaley said the Beach's water woes played a role in the decline, although he can't say how much.
City officials decided more than a decade ago that the best solution to the impending water crisis was to run a 76-mile pipeline to the Roanoke River where it flows through Lake Gaston. Part of the lake is located in North Carolina, and officials there have managed to put repeated stumbling blocks in the city's way.
Most recently, the Federal Energy Regulatory Commission decided the city needed to conduct a time-consuming environmental review before beginning construction of the pipeline.
The city has sued the federal commission in hopes of avoiding the review.
Without a Lake Gaston hookup, city water for new development will likely run out next summer. That means large-scale development in Virginia Beach could be over by the time the next crop of sweet corn is ready to be harvested.
``The best guess I've got is we've got about a year's worth of lots out there that can be built upon,'' said Jerry Banagan, Virginia Beach real estate appraiser.
The projects that were exempt from water-conservation restrictions that took effect in February 1992 are nearly built, and even optimists admit the city won't get any water from Lake Gaston for at least three years. Those factors, combined with the City Council's approval last month of well-water restrictions, means there will be no water left for major developments, Banagan said.
Anticipating this decline in development opportunity, he has lowered the assessed value of vacant land in the northern part of the city by as much as 40 percent. City growth restrictions already have limited development on land in the southern part of the city.
He has reduced the assessed value of farmland in Northern Virginia Beach from $40,000 an acre to $25,000 an acre, and the value of vacant commercial land there from $4 per square foot to between $2.50 and $3 a square foot.
Banagan could not say how many lots had been affected, but said the city's tax base will not be significantly damaged because most of the acreage he devalued is classified as farmland and is not taxed as heavily as other properties.
He said he doesn't believe the lack of supply will drive up demand - and therefore the price - of existing development in Virginia Beach to compensate for the loss of new projects, though. There are just too many opportunities to build in neighboring towns like Chesapeake, he said.
Clarence Warnstaff, director of public utilities for Virginia Beach, says others are overestimating the magnitude of the crunch. He said wells - even with the recent council restrictions - will allow growth to continue unabated until the Lake Gaston pipeline is completed.
Bob Scott, Virginia Beach director of planning, said he thinks development will change in character over the next year, rather than come to a complete halt.
Instead of building dense subdivisions, developers will have to settle for the one home per acre allowed under the well restrictions. Commercial builders might have to substitute golf courses for shopping centers.
``A given piece of land may have development opportunities available to it, but they wouldn't be as broad a range of opportunities,'' Scott said.
And Chris Chmura, chief economist and senior vice president of Crestar Bank in Richmond, predicts the downturn won't be long-lived: If the Lake Gaston pipeline problem isn't resolved relatively quickly, Virginia Beach will figure out another way to get water, like desalinating the ocean.
``It will be resolved before it spreads too far,'' she said. ``Politically, people may be more willing to make concessions to resolve it.'' ILLUSTRATION: Graphic
STAFF
SOURCE: City of Virginia Beach Department of Public Works
[For complete graphic, please see microfilm]
by CNB